Shares of Snap Inc (NYSE: SNAP) rose by 23 percent to $17.80 after the market closed on Tuesday as the company reported revenue of $285.7 million in the fourth quarter of 2017, beating an estimated $252.9 million based on consensus from Thomson Reuters.
Snap, owner of the popular Snapchat social media app, reported a loss of 13 cents a share compared to an estimated 16 cents per share, according to consensus from Thomson Reuters.
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Snap reported global daily active users of 187 million, topping expectations of 184.2 million. The average revenue per user estimate was $1.53, better than the $1.36 analysts expected.
The company has not generated a profit and its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss was $158.9 million, an increase of 4 percent year-over-year and an improvement of 11 percent sequentially. Snap was able to slow down its cash burn to $225 million, a decline of 49 percent from the previous quarter.
The Venice, California-based company’s users are still waiting to see its redesigned app. The change of the original design was announced three months ago, but the rollout has been delayed.
The new app is being used by people in Australia, Canada and the U.K., but users are unhappy and 83 percent gave it only one or two stars, says SunTrust Robinson Humphrey analyst Youssef Squali in a research note.
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He also notes that “industry feedback on advertisers’ demand for Snap inventory remained lukewarm during the quarter” and rates the stock a “sell” with a $10 price target.
Doug Anmuth, an analyst with J.P. Morgan echoed a similar sentiment and says “we are not hearing a pickup in advertiser demand in our industry discussions.”
Snap has faced hurdles in attracting Generation X and baby boomer users, and its stock has been volatile since the company went public in 2017. The stock was priced at $17 per share last March. While the stock rose quickly to $29, it also faced steep declines and bottomed at $11.28 in August.
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Snap Inc Stock Skyrockets After Hours Following Earnings originally appeared on usnews.com
